Car hire firm Avis Europe has warned that it will be raising rental prices to both its leisure and business users in the near future. Avis says that it has had to push prices up to cope with the lack of demand for rental vehicles caused by the global economic downturn. Avis has already managed to reduce its rental fleet size by around a fifth in an attempt to cut costs. As well as a reduction in the numbers of vehicles available Avis says it will continue with its programme of redundancies and freezes of both staff pay levels and recruitment.

By reducing the numbers of vehicles in it fleet Avis say that it has managed to offset the decline in passenger numbers whilst increasing rates of usage and decreasing costs. Avis says that cost cutting measures will not help a decline in revenue but will help to make the companies staff more productive.

The company also said that it was aiming to optimize the relationship between Avis and Budget not just in the U.K. but throughout Europe in countries such as France, Austria and Switzerland.

When talking about the future and the economic climate as a whole Avis said that it was being very cautious about making any predictions concerning both business and leisure spending.

It is hoped that cost cutting initiatives at Avis will result in a second-half restructuring charge in the region of €11 million according to a management statement.